Gaming Innovation Group raise SEK400m bond

Gaming Innovation Group raise SEK400m bond

Monday, February 20, 2017
Cash will go largely towards affiliate sector buyouts

Gaming Innovation Group (GIG) has followed up its recent affiliate market acquisition by raising a war chest of SEK400m (£36m) via a secured bond issue that the company says will fund further buyouts in the area.

Only last week GIG announced it had bought an unnamed affiliate business for €3.5m to strengthen the company’s Innovation labs affiliate business.

Now it has announced it has secured funding for further add-on deals, and that it has room to triple the amount of borrowing to SEK1.25bn should it wish. The company said the bond issue was “significantly oversubscribed” due to strong demand from investors across the region.

Of the new money raised, €6m will go to retiring GIG’s current debt

The bond raise suggests further consolidation within the affiliate space; alongside the moves made by GIG, Catena Media similarly moved within the last week to add to its affiliate assets with the acquisition of the Slotsia affiliate business for an initial €3.6m. GIG and Catena media share a common shareholder in Optimizer Invest.

GIG’s previous affiliate acquisitions include Magenti Media, bought for €5.1m in March last year and Delta markets in the same month. The company said at the time it was buying a number of referral sites alongside SEO expertise.

Commenting on the news to TotallyGaming.com, Edward Ihre, co-founder of live casino site Codeta and a consultant in the affiliate space, said that the news of the bond raise signalled further buyouts. He noted that Catena Media, Raketech (who recently raised €70m for its own affiliate spending spree) and XL Media have also signalled their acquisitive intent.

“It’s a fair guess we will see more activity in the space,” he said.

He noted that both Catena Media and GIG were able to leverage reasonably buoyant valuations for the shares to buy up assets on cheaper valuations and add scale to their own earnings. “The bigger companies are enjoying good valuations, in terms of P/E ratios, so it makes sense for them to add these businesses - which they can buy on lesser valuations - to the balance sheet.”

GIG chief executive Robin Reed said the acquisitions were about interconnecting operators and suppliers of the iGaming industry in an eco-system.

“The proceeds from this bond placement will allow us to acquire and invest into marketing businesses and distribution channels. This will greatly increase our traffic driving capability to our rapidly expanding eco-system. More volumes will benefit all the stakeholders with advantages of scale.”

The B2B segment at GIG, of which Innovation labs is a large part, rose 17 percent quarter-on-quarter in the last three months of the year to €5.06m. First-time depositor (FTD) numbers rose to over 10,000 compared to circa 4,500 a year previously. For the full-year, FTD numbers rose to over 36,000 largely driven by the acquisitions.

Totally Gaming says: The consolidation of the affiliate sector continues at a pace. The news of the bond raises the stakes once more and suggests further deal will be coming in the months ahead.

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